NY/NJ Market Hits #1 on Multifamily Housing List

The NY/NJ market leads the nation in planned multifamily construction. 

Learn how our region is helping the housing shortage—and pleasing investors!

In the aftermath of the pandemic, one of the most persistent headlines has been the rocky state of the U.S. housing market. Heading into the second half of 2024, economists still report an extreme housing shortage estimated as high as 7 million missing units across the country.  

And while overall real estate numbers have dipped slightly over the past year, home prices and rents remain 30% higher than they were prior to 2020. Furthermore, despite today’s economic downturn, people still need somewhere to live. This means investors pursuing new multifamily construction are not only seeing robust returns, but are also helping to curb the housing crisis. 

Sounds like a win-win! 

So, what’s there to know about the New York/New Jersey rental housing market in particular? Are investors in our region seeing the same level of success as other hotspots in the South and West? Let’s turn to the headlines…

NY/NJ leads the urban living trend

Before we can appreciate the state of the multifamily, it’s important to understand what’s happening in the realm of single-family home construction. 

Back in 2021-2022, building permits for single-families skyrocketed, but many of those projects never panned out due to labor and supply chain shortgages (among other financial challenges). Flash-forward to 2024, and the number of new applications has once again declined due to rising interest rates. This, coupled with decades of under-building relative to population growth, has led us to today’s dire housing predicament. 

Thus, the single-family shortage has paved the way for some excellent opportunities in the area of multifamily development. A new Construction Coverage study shows that the percentage of new housing in multifamily structures recently reached its highest level since 1985! Even more impressively, some of Everest’s very own commercial investors are leading the charge. 

How so? 

The report ranks “New York-Newark-Jersey City” as the #1 U.S. market for multifamily housing with 79.3% of all newly authorized housing units designated as multifamily structures. Rounding out the top five were Seattle, Washington, Boston, Massachusetts, San Francisco, California, and Hartford, Connecticut. 

These new units will boost housing availability and help slow rent growth in our local communities. More importantly, for investors in New York and Northern New Jersey, the news signals a strong vote of confidence for new construction projects heading into 2025. 

If you were thinking about riding out the current economic climate or waiting around for lower interest rates, stop hesitating! Now is the time to capitalize on our region’s chart-topping multifamily housing outlook. Experts emphasize that areas with “good” existing amounts of multifamily units (like New York) continue to see a rise in new building authorizations. That’s all the more reason to make your move. 

The moral of the (multi)story 

Given the aforementioned news, we thought we’d revisit the topic of multifamily housing and why it’s a universally “safe” investment—especially compared to other real estate asset classes. This time, we’re tossing in some considerations from the current rental market—and—a few words of wisdom from Everest senior loan officer, Sharon Dermer.  

Why is the New York-Newark-Jersey City market so hot at the moment? Read on to find out…

Why Multifamily Housing is a Strong NY/NJ Investment

Reason #1: It’s more efficient and cost-effective 

With housing availability a huge concern these days, multifamily development presents a clear solution to the problem compared to single-family homes. It’s also a smart way to maximize space and minimize costs when construction is involved.

“In places like New York and Northern New Jersey where land can be scarce and expensive, multifamily buildings are an obvious choice,” says Mrs. Dermer. “Putting multiple units on a single plot of land cuts your expenditures—not only for the property itself, as the cost is spread across many units, but also for the labor, materials, and infrastructure.”

The way things are nowadays, investors and developers are happy to lower their costs in any way possible. Multifamily investment often offers easier financing, better terms, and greater return compared to other rental types. 

Reason #2: Proximity to in-demand locations and amenities 

Although residents of Jersey City, Newark, and certain New York neighborhoods face higher crime rates, population density, noise, pollution, and other urban living challenges, there’s a reason these communities retain their appeal. 

Mrs. Dermer explains, “For many residents, the cons do not detract from the overwhelming pros of living so close to New York City, its employment opportunities, ethnic diversity, and vibrant multicultural amenities. Rents are more affordable compared to Manhattan and Brooklyn, the commute is effortless, and there’s plenty of options for entertainment, shopping, and dining. This is why multifamily investors have a long history of success in suburban New York and Northern New Jersey. Proximity is so important!” 

If a property is located close to a train station, subway, light rail, or other major transportation hub, expect to rake in a greater premium. Coupled with a modernized interior, nice curb appeal, and in-demand features like onsite laundry, your multi-housing venture can’t go wrong! 

Reason #3: Renting has gained renewed appeal

Given today’s competitive single-family market, it’s no surprise people in NY/NJ are delaying their dreams of homeownership. But high interest rates and home prices aren’t the only reason renting is actually the preferred housing option for a certain demographic. 

“There will always be buyers for single-family homes, so it’s not just the current economic climate,” says Mrs. Dermer. “There’s also a generational shift happening. Some younger families want the flexibility of renting, as without the commitment of a mortgage, they can easily relocate. Renting is a practical choice for those who are saving up for a down payment or want cost predictability as they pay off other debts. Not to mention, some people don’t want the responsibility of maintenance and repairs.”

NY/NJ real estate investors can capitalize on these changing lifestyle preferences in a number of ways. To attract this class of renters, smart multifamily strategies include prioritizing onsite amenities; cultivating a strong community atmosphere; and ensuring residents’ safety and security.

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